Market regime
A persistent market environment (trending, calm, or turbulent) that a rules-based reading identifies from price behaviour, rather than a prediction of what comes next.
Also called: market regimes, regime
A market regime is the character of the environment an asset is in: is the trend constructive or weakening, is momentum building or fading, is volatility calm or elevated? A regime is a description of the present, read from prices. It is not a forecast.
Witan Way's weekly Charter reads a regime for each of its five markets: equities, government bonds, gold, commodities and bitcoin. It combines simple public dimensions such as trend, momentum and coherence into a descriptive state. The state can change; when it does, that is information to weigh, not an instruction to act.
Related terms
- MomentumThe tendency of assets that have performed well (or poorly) recently to keep doing so for a time, a well-documented pattern used by trend and momentum strategies.
- VolatilityHow much an asset's price fluctuates over time. High volatility means larger swings. It measures turbulence, not direction, and it is not the same thing as risk.
Read it in context
- Price, value and expectationsA price is not a measurement of what something is worth. It is what buyers and sellers will trade at now, and it already contains what they collectively expect. That is why an announcement can be good and the price can still fall.
- What tactical asset allocation isTactical asset allocation, or TAA, adjusts how much of a portfolio sits in each broad category as conditions change, rather than holding fixed proportions through everything. Those shifts may be judged by a person or decided by written rules, but they move between whole categories, never between individual companies.